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1979 DIGILAW 132 (CAL)

Enterprise for Waterways Ivan Milutinovic Pim v. Board of Trustees for the Port of Mourmugao

1979-04-05

PADMA KHASTGIR

body1979
ORDER 1. This application has been taken out by the Board or Trustees for the Port of Mourmugao, the defendant no. 1 herein for an order for revocation of leave granted under clause 12 of the Letters Patent in this suit, the suit and any proceedings thereunder be permanently stayed, injunction restraining the plaintiff and/or its agents or servants or assigns from taking any further steps in the said suit and for other consequential reliefs. 2. The facts of this application shortly are that the plaintiff M/s. Enterprise for Waterways Ivan Milutinovic Pim instituted this suit against the petitioner, the defendant no. 2, United Commercial Bank, and defendant no. 3 on 20th of November, 1978, inter alia, for a declaration that the deed of guarantee dated 14th of September, 1974 executed by the defendant no. 2 in favour of the defendant no. 1 ceased to have effect from 1st of December, 1976 and the same is not binding and/or enforceable against the plaintiff from that date. As such the said deed of guarantee be declared null and void on and from 1st of December, 1978, and an order for delivery up of the deed of guarantee and also for a declaration that the Ports Trusts are not entitled to claim for damages or other reliefs against the plaintiff under deed of guarantee; as such any claim to enforce the said guarantee is wrongful and illegal, injunction restraining the defendant no. 1 from making any claim in respect of the Bank guarantee or to ask for any extension of time, an injunction restraining the defendant no. 1 from filing any suit or claim in respect of the said Bank guarantee, Receiver etc. 3. In this suit the Respondent No.1 obtained leave under Clause 12 of the Letters Patent. According to the petitioner, from the perusal of the plaint including the prayers asked for it would appear that there is no specific allegation against the defendant no.2 or defendant no.3 and there is no cause of action in favour of the plaintiff against tile said defendants. In fact no relief has been claimed against the defendant no.3. There is no allegation in the plaint against the defendant no.2 with regard to its conduct in respect of Bank guarantee. In fact no relief has been claimed against the defendant no.3. There is no allegation in the plaint against the defendant no.2 with regard to its conduct in respect of Bank guarantee. Leave under Clause 12 of the Letters Patent was obtained by the plaintiff in this suit by making certain allegations in paragraphs 3, 5, 6 and 7. In paragraph 3, it has been stated by the plaintiff that the Bank guarantee was in favour of Port Trust which was executed and issued by the defendant no.2 at Calcutta within jurisdiction of this Court. In paragraph 5 it has been pleaded that in terms of Clause 10 of further supplemental agreement the plaintiff made arrangements with the defendant no.2 at Calcutta within jurisdiction of this Court for issue of Bank guarantee and the defendant no.2 duly executed and granted Bank guarantee at Calcutta in favour of the Pan Trust. The paragraph 6 sets out various terms and conditions of the said Bank guarantee In paragraph 7 it has been pleaded that on 7th of October, 1974 certain amendments were made by mutual consent of the parties and these amendments are recorded in a letter written and sent by the defendant no.2 from Calcutta within the jurisdiction of this Court to the Chairman, Port Trust which amendment provided that in case the date of completion of the work under agreement is extended the guarantee will automatically be extended upto a date for six month after the said extended date for completion. 4. According to the petitioner, from the perusal of the said paragraphs in the plaint it would appear that the execution of the Bank guarantee is the only cause of action alleged by the plaintiff to have arisen within the jurisdiction of this Court. Any arrangement made for execution of or giving Bank Guarantee at Calcutta, according to the petitioner, does not give the plaintiff a cause of action. Even assuming the said Bank guarantee was given to the plaintiff at Calcutta within jurisdiction but even this that does not and cannot constitute a part or the plaintiff's cause of action as the guarantee, in question, was banded over by the plaintiff to the Chairman of the Port Trust at Mourmugao and all amount payable under the laid Bank guarantee is payable by the Bank at Mourmugao. There is no allegation whatsoever that any part of cause of action as pleaded in paragraph 6 of the plaint has arisen within the jurisdiction of this Court. Setting out of the various terms and conditions of the Bank guarantee did not and cannot constitute a part of the cause of action of the plaintiff. Even writing of the letter dated 7th of October, 1974 or posting of the said letter from Calcutta does not constitute any part of the plaintiff's cause of action. Secondly it is the case of the petitioner that leave under clause 12 has been obtained by the plaintiff by suppressing all material facts inasmuch as clause 71 of the General Conditions of the Contract provides "The contract shall be interpreted and have effect in accordance with the laws of India and no suit or other proceedings relating to this contract shall be filed or taken by the contractor in any court of law except in a court of competent jurisdiction at Goa." The plaintiff with an ulterior motive has completely suppressed the said clause from this Court. In view of the specific provision in the contract making the contract subject to the jurisdiction of the court in Goa the plaintiff is debarred from instituting any suit in respect of the said contract or any matter arising in connection with the said contract in violation of and in derogation of the specific provision of the contract as aforesaid. According to the petitioner, the mere adding of the defendant no.2 as a party defendant in connection with the Bank guarantee dated 14th of September, 1974 would not entitle the plaintiff to file a suit before this Court in breach of the specific provisions as contained in the contract the petitioner's case is that the entire contract including the supplemental agreement and further agreement were entered into at Mourmugao outside the jurisdiction of this Court. The entire contractual work was executable at Mourmugao outside the jurisdiction of this Court. The purported certificate of completion was granted at Mourmugao outside the jurisdiction of this court. The correspondences were exchanged outside the jurisdiction; as such the entire cause of action of the plaintiff has arisen entirely outside the jurisdiction of this court. The entire contractual work was executable at Mourmugao outside the jurisdiction of this Court. The purported certificate of completion was granted at Mourmugao outside the jurisdiction of this court. The correspondences were exchanged outside the jurisdiction; as such the entire cause of action of the plaintiff has arisen entirely outside the jurisdiction of this court. In the premises and more so in view of the specific clause in the contract and for the sake of balance of convenience the suit should be stayed and leave under clause 12 should be forthwith revoked. This Court, according to the petitioner, has no jurisdiction to entertain and/or try and determine the suit in the circumstances as stated above and there should be also an order of injunction restraining the plaintiff from proceeding with the suit or taking any further steps thereunder. 5. Mr. Cooper appeared with Mr. Tarun Kumar Basu on behalf of the petitioner and submitted that because of the clause precluding the jurisdiction of this court and for the sake of balance of convenience and because of suppression of material facts and also because as no part of the cause of action has arisen within jurisdiction; as such an order should be passed in favour of the petitioner. Moreover considering the facts that the petitioner has no office at Calcutta, the contract was required to be carried out at Goa. The plaintiff handed over to defendant no.1 at Goa the Bank guarantee and last of all on the principle that the debtor must find the creditor and payment must be made at Goa as such leave should be revoked. On the contrary, no inconvenience would be suffered by the plaintiff as the plaintiff has its office at Goa; as such balance of inconvenience is in favour of the petitioner. This petition for revocation of leave has been made not on trifling point but on overwhelming grounds; as such an order should be passed in favour of the petitioner. He craved reference to various cases. 6. Mr. M.K. Banerjee with Mr. Umesh Kumar Banerjee opposing the petition submitted that the cause of action against the Respondent no.1 has, substantially arisen within the jurisdiction of this court and so far the defendant no.2 is concerned the entire cause of action has arisen within the jurisdiction of this Court; as such no leave required. 6. Mr. M.K. Banerjee with Mr. Umesh Kumar Banerjee opposing the petition submitted that the cause of action against the Respondent no.1 has, substantially arisen within the jurisdiction of this court and so far the defendant no.2 is concerned the entire cause of action has arisen within the jurisdiction of this Court; as such no leave required. Even if leave is cancelled that would be in respect of plaintiff's cause of action against the defendant no.1. The plaintiff would be entitled to pr0ceed with the suit so far the Sank is concerned. On the question of balance of convenience there should not be any difficulty at all in view of the fact that there is hardly any scope of oral evidence in this suit and the issues can be decided by relying on documentary evidence. Even assuming that the defendant no.1 wanted to adduce oral evidence there should be no difficulty as the Calcutta Port Trust has office from which office the defendant can conduct the litigation in Calcutta. According to Mr. Banerjee, true Bank guarantee was executed in Calcutta. Even the demand made on the said Bank guarantee by the defendant no.1 was sent by special messenger from Goa to Calcutta to be delivered at the Bank's office. The plaintiffs in this case can only file a suit in Calcutta against the Bank and not at Goa as the Goa Branch had no concern whatsoever with the execution and granting of the Bank guarantee; as such for the ends of justice arid for preventing an abuse of the process of court no order should be passed on this application Mr. Banerjee further submitted that Bank not being a party to agreement, the exclusion of jurisdiction clause is not binding on the Bank; as such the present suit can be filed against the Bank in the Calcutta High Court Last. Last of all Mr. Banerjee submitted that so far clause 71 of the agreement is concerned there is no mutuality between the parties as it provides that only in the case of contractor the suit will hive to be filed at Goa; as such this Court will have to take into consideration as to how far that clause in view of absence of mutuality is valid and binding on the parties. The balance of convenience depends on the facts and circumstances of each case and considering the facts of this case no order should be passed on this application. The present suit cannot be proceeded with without the Bank and in this case the plaintiff cannot sue the Bank's branch office at Goa which had nothing to do regarding the grant and execution of the Bank guarantee. Mr. Banerjee submitted that this clause 71 is in the nature of an arbitration clause; as such one party cannot proceed with arbitration and in that respect he craved reference to various cases. 7. From the facts as discussed above it would appear that the plaintiff in this suit is trying to construe the guarantee bond and also praying for an injunction restraining the defendants from enforcing the said guarantee bond. It has been specifically agreed by and between the parties that whatever may be the nature of dispute first of all it will be sent for arbitration and secondly there is also an exclusion of jurisdiction clause agreed by and between the parties. In Clause 71 of the agreement the parties expressly agreed that the court at Goa will have exclusive jurisdiction to try and/or determine the dispute arising by and between the parties. 8. Mr. Milan Banerjee's submission that in this suit the respondent Bank has also been added as a party and the said Bank was not a party to the agreement; as such the respondent Bank is not bound by the exclusion of jurisdiction clause in the agreement, as such the plaintiff will have to proceed with the suit against the Bank in Calcutta and nowhere else is refuted by the fact that the respondent Bank has a branch office at Goa. 9. In the case reported in Shah Prabhudas vs. Eurasian Equipments, AIR 1977 Cal 449 , a Division Bench of this Court held that even in a contract between the plaintiff and the defendant where the contract by agreement of the parties was made subject to Bombay jurisdiction and even where the Bank was not party to the said contract it was held that the balance of convenience was in favour of Bombay Court although there was a branch office at Calcutta of the respondent Bank. It was further held that the place of suing in respect of enforcement of any claim under the contract was restricted to Bombay Court. It further held "The mere fact that the Bank was impleaded as a party to the suit and the plaintiff had transaction with its branch office at Calcutta would not entitle the plaintiff to file a suit at Calcutta." There it was held that the balance of convenience was overwhelmingly in favour of the case being tried at Bombay. The respondent Bank having a branch office at Goa gives the jurisdiction to the Goa Court to try the case at Goa. Simply because the head office of the respondent Bank is in Calcutta or because the bank guarantee was prepared by the head office in Calcutta does not give the plaintiff right to file a suit against the Bank in Calcutta. In that case also it was urged that as the transaction was entered into with the branch office at Calcutta and although the said Dena Bank had a branch in Bombay and the said branch constitutes a separate entity the suit could never be filed in respect of that branch which falls within the jurisdiction of this Court and the Counsel on behalf of the plaintiff Bank cited 1912 Appeal Cases 212 and the case reported in AIR 1956 Cal 33 The learned judges of the Court came to the conclusion that the mere fact that the Bank has been impleaded as a party to the suit does not entitle the plaintiff to file a suit in this court in breach of the specific provisions contained in the contract as it could not be held that the Bombay court did not have jurisdiction to try a suit against the Bank. The head office of the Bank was in Bombay. The question of balance of convenience of the defendant Bank in the facts and circumstances of this case lost a great deal of its importance considering the question of balance of convenience of the other parties. 10. The head office of the Bank was in Bombay. The question of balance of convenience of the defendant Bank in the facts and circumstances of this case lost a great deal of its importance considering the question of balance of convenience of the other parties. 10. In the case reported in Rajendra Mills vs. H.V.M. Hazi Hasan Dada, AIR 1970 Cal 342 , a Division Bench of this Court held that in a case where two courts have concurrent jurisdiction and where parties by agreement waived their right to institute any action at a particular court out of two courts it was not open to the plaintiff to object to the order for return of the plaint for presentation before the agreed court. There the Union of India was a co-defendant. Though it was not a party to the agreement the Union of India could not object to such a course of forum in cases of alternative forum, the choice lies with the plaintiff and the plaintiff having debarred or precluded itself from going to any court except to the agreed court it would not be just to allow the plaintiff at the instance of any other party or under the cover of that objection to institute a suit except at the court agreed upon. In such circumstances the plaintiff cannot object to the order for return of the plaint for presentation at the agreed forum. The Board of Trustees of the Port of Mourmugao has purported to exercise right under the guarantee bond and the plaintiff's case is that the respondent no.1 is not entitled to enforce the said Bank guarantee or ask for extension of time; as such the respondent Bank should the restrained by an order of injunction from making an offer of payment to the Board of Trustees at Mourmugao. It is the case of the petitioner before me that such a relief cannot be granted in view of the expressed provision in the contract. 11. It is the case of the petitioner before me that such a relief cannot be granted in view of the expressed provision in the contract. 11. In the case reported in AIR 1979 Cal 44 Sabyasachi Mukharji, J. held that in the absence of special equities arising from a particular situation which might entitle the party on whose behalf the guarantee is given to an injunction restraining the Bank in performance of the Bank guarantee and in the absence of any clear fraud the Bank must pay to the party in whose favour the guarantee is given on demand; if so stipulated, and whether the terms are such have to be found out from the performance guarantee as such. Where though the guarantee was given for the performance by the by the party on whose behalf guarantee was given, in an orderly manner its contractual obligation, the obligation was undertaken by the Bank to repay the amount on first demand and without contestation demur or protest and without reference to such party and without questioning the legal relationship subsisting between the party in whose favour guarantee was given and the party on whose behalf guarantee was given and the moment a demand was made without protest and contestation the Bank had obliged itself to pay irrespective of any dispute as to whether there had been performance in an orderly manner of the contractual obligation by the party. Consequently in such a case the party on whose behalf guarantee was given was not entitled to an injunction restraining the Bank in performance of its guarantee. 12. In a case reported in AIR 1956 Cal. 33 , P.B. Mukharji, J. held "The Courts have insisted that the onus is upon the defendant to satisfy the Court; first that the continuance of the action would work an injustice because it would be oppressive or vexatious to him or would be an abuse of the process of court and secondly also that the stay will not cause any injustice to the plaintiff. The Court will stay action when it is satisfied that the plaintiff will suffer no injustice whereas if the action is continued the defendant will in defending the action be the victim of such injustice as to amount to oppression and vexation and which vexation and oppression would not arise if the action were brought before the other court having jurisdiction. There in that case P.B. Mukharji, J. held that a branch in fact is an agency of the principal bank. A branch bank has often been regarded as very distinct entity for many special purposes and the learned Judge enumerated such special purpose, i.e., where the Bank refuses payment of customer's cheque except on the particular branch where the customer keeps his account or in a case where extension of time for dishonour was given etc. 13. Form the facts and circumstances of this case it would appear that although the Bank guarantee was prepared and banded over by the respondent Bank to the plaintiff in Calcutta in fact such Bank guarantee was handed over by the plaintiff to the Port Trustees in Mourmugao where the respondent Bank has a branch office; as such it cannot be contended by the Bank that the plaintiff cannot bring an action at Goa impleading the defendant Bank as a party defendant there. 14. In a case reported in AIR 1953 SC 1044 the Supreme Court held "The Court ordinarily requires the parties to resort for resolving disputes arising under the contract to the tribunal contemplated by them at the time of the contract. That is not because the Court regards itself bound to abdicate its jurisdiction in respect of disputes within its cognizance; it merely seeks to promote the sanctity of contracts, and for that purpose stays the suit. The jurisdiction of the Court to try the suit remains undisputed; but the discretion of the Court is on grounds of equity interposed. The Court is therefore not obliged to grant stay merely because the parties have oven under a commercial contract agreed to submit their dispute in a matter to an arbitration tribunal in a foreign country" In that case considering the balance of convenience and the facts and circumstances of that particular case made the Court not to grant any stay. 15. In a case reported in AIR 1971 SC 740 , it has been held that partier cannot by agreement confer jurisdiction on Court not possessed by it under the Code; but agreement that one of Courts having such jurisdiction alone shall try the dispute is not contrary to public policy and does not contravene to S. 28 of the Contract Act. 16. 16. In a case reported in Union of India vs. Kuppuswamy Naickar, AIR 1978 Cal 222, it has been held by a Division Bench of this Court that "it is well settled that in giving or refusing leave or maintaining or revoking leave the Court would ordinarily take into consideration the balance of convenience and may, if the circumstances is definitely in favour of the defendant, apply the doctrine of forum convenience" 17. The case reported Motabhai Golab Das vs. Mahalaxmi Cotton Mills, 91 CLJ 1, held that "it is well settled that individuals by private consent cannot confer jurisdiction upon a court which does not possess by the ordinary law. Individuals cannot also by agreement divest a court of jurisdiction which it possesses under the ordinary law. In spite of such covenant Court, therefore, retains its jurisdiction to try the suit if it has such jurisdiction under the ordinary law. It is also well settled that such covenant does not contravene the provisions of S. 28 of the Contract Act if the chosen Court has jurisdiction to try a suit under the ordinary law because the restriction is only partial and the plaintiff is not restricted absolutely from enforcing his rights by the usual legal proceedings in the ordinary tribunal. Courts can and should in an appropriate case enforce such covenant where it is lawful. As a matter of fact courts have enforced such covenant by an injunction. When litigation started in a court other than the chosen court in breach of the covenant such other court may enforce the covenant and refuse to proceed with the suit at any stage." 18. In the case reported in AIR 1977 Cal 451 Sabyasachi Mukharji. J. held that "Court will prevent vexatious proceeding which would have the effect of preventing the due administration of justice and the general principal is that the Court, can and will interference when there is vexation and oppression to prevent the administration of justice being perverted in an unjust end. The principles to be followed in such a matter are, firstly, mere balance of convenience is not sufficient ground for depriving the plaintiff of his choke of forum. The principles to be followed in such a matter are, firstly, mere balance of convenience is not sufficient ground for depriving the plaintiff of his choke of forum. Secondly the Court will have to be satisfied that by such stay the plaintiff will not suffer any injustice whereas an action if continued the defendant in defending the action will be the victim of such injustice as would amount to vexation and oppression which vexation or oppression will not arise if the suit is stayed. The parties could not by any private agreement confer or take away the jurisdiction but the Courts could compel parties to abide by their contract if there is such a contract and if there is no circumstance indicting otherwise, the Courts would compel the parties to abide by their contracts." 19. In the case reported in 1971 SC 740, it has been held "Parties cannot by agreement confer jurisdiction on court not possessed by it under the Code but agreements that one of the Courts having such jurisdiction shall try dispute is not contrary to public policy and it has not contravened S. 28 of the Act." 20. From the facts it would appear that the plaintiff is trying to get an order preventing the Port Trust Authorities from enforcing the bank guarantee. As pleaded in the plaint the plaintiff has no cause of action against the defendant Bank save and except indirectly asking the defendant Bank for not making any payment. From the perusal of the various clauses as contained in the Bank guarantee it would appear that this guarantee is an irrevocable Bank guarantee which guarantee to Board of Trustees the due and punctual performance by the contractor of its obligations under the principal and supplemental agreements and to indemnify the Port Trust to the extent of Rs. 1,20,00,000/- against any loss or damage which may be suffered by the Board of Trustees by reason of any breach by the contractor of any of the terms and conditions. 1,20,00,000/- against any loss or damage which may be suffered by the Board of Trustees by reason of any breach by the contractor of any of the terms and conditions. Under the terms it would be open to the Board of Trustees to terminate the agreements and take over the execution work from the Contractor and entrust unfinished work to anybody else and the Bank shall pay within two days of the receipt of written request on behalf of the Board of Trustees the amount of loss or damage suffered by them and it is expressly agreed that the Board shall be sole judge as to whether the contractor has committed any breach or not and the statement signed by the Chairman for the Board of Trustees shall be the conclusive evidence as to the fact of the breach and damage suffered by the Board. Under clause 8 of the agreement although between the Bank and the contractor the Bank is the guarantor only, the Bank agreed and confirmed that as between itself and the Board the Bank shall be primarily liable and shall be treated as the principal debtor as such the case reported in AIR 1969 Cal 374 has no application in this Case. Even under clause 10 the Board of Trustees can proceed against the Bank without proceedings against the contractor. Under clause 11 the Bank guarantee and indemnity is irrevocable and shall not be cancelled by the Bank without making full payment up to the limit of guarantee. The guarantee remained valid till 30th of November, 1978 after which date it would automatically lapse unless suit or claim or action is filed before that case. In fact before the expiry period the claim has already been lodged by the Port Authorities .with the Bank. 21. From the various clauses as contained in the Bank guarantee it would appear that the Bank has agreed to pay forthwith on demand being made by the Chairman of the Board of Trustees. Even if there is any dispute by and between the plaintiff and the defendant no.1 the Bank is not concerned with the same under the said agreement. Here the plaintiff is trying indirectly to take advantage when directly it cannot stop the Bank from making payment. Even if there is any dispute by and between the plaintiff and the defendant no.1 the Bank is not concerned with the same under the said agreement. Here the plaintiff is trying indirectly to take advantage when directly it cannot stop the Bank from making payment. In the absence of fraud or special equities the Bank is bound to honour the guarantee it has given in favour of the Port Trust Authorities. Nobody appeared on behalf of the Bank to oppose an order being passed on this application. From the facts as disclosed e1Jborately it would appear that the contract was entered into at Goa. It was executable at Goa. The Bank guarantee was given pursuant to the agreement arrived at Goa and handed over by the plaintiff to the defendant in Goa. The defendant no. 2 has its branch office at Goa. It is apparent from the cause title that the plaintiff has its office at Goa; on the contrary the Post trust or Mourmugao has no office in Calcutta. Considering those facts and applying the principle of balance of convenience it is just and proper that the plaintiff should abide by the said covenant that it has entered into regarding choice of forum. Moreover from the plaint it would appear that the plaintiff did not disclose that under Clause 71 of the agreement the parties have specifically agreed to submit to the jurisdiction at Goa. By suppressing such material facts leave has been obtained from this Court. Whether the particular clause 71 lacks in mutuality can be gone into and decided by the court at Goa. 22. Mr. Milan Kumar Banerjee cited numerous cases. There cannot be any dispute as to principle as laid down in those cases. Applying the same principles to the facts of this case it would appear that the plaintiff considering cause of action as made out in the plaint should have lodged his case before the forum agreed to by and between the parties. As the defendant Bank has a branch office at Mourmugao that will entitle the plaintiff to bring an action against the defendant Bank also before the court at Goa. The plaintiff will not be prejudiced and would not suffer any inconvenience if the suit is brought before the Court at Goa. As the defendant Bank has a branch office at Mourmugao that will entitle the plaintiff to bring an action against the defendant Bank also before the court at Goa. The plaintiff will not be prejudiced and would not suffer any inconvenience if the suit is brought before the Court at Goa. The balance of convenience for trial of the case as a whole is overwhelmingly in favour of the competent court in Goa. It is true that the complicated question of facts and questions of difficulty of importance should be decided on applications but must be relegated to suits. But here there are no questions for any determination of any complicated facts or there is no question of great importance which should be tried at the hearing of the relegated suit for the purpose of determination of the jurisdiction of this court; as such the cases reported in 35 CWN 930 and 44 CWN 460 have no application in the present case. 23. From the prayers of the plaint it would appear that out of seven prayers one prayer his been bought for against the defendant no.2. i.e., for an order of injunction restraining the Bank from making any payment under the deed of guarantee. In prayer (e) it has been claimed that an order of injunction be passed restraining the defendant no.1 from making any claim or demand in terms of the said bank guarantee and an order of injunction has also been prayed restraining the defendant no.1 from filing any suit or claim or action in respect of the said bank guarantee which if granted would serve the same purpose. There is no specific cause of action against the defendant Bank. Considering the facts and law as discussed above I am of the opinion and hold that the petitioner is entitled to get an order in terms of prayers (a), (b), (c) and (e) of the petition. There will bestay of operation of order for 3 weeks from date. Application allowed.